ECONOMY

 

 

It is a market economy with low labor costs and tariff-free access to the US for many of its exports. Poverty, corruption, and poor access to education for much of the population are among Haiti's most serious disadvantages.

Two-fifths of all Haitians depend on the agriculture sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disasters, exacerbated by the country's widespread deforestation. A macroeconomic program developed in 2005 with the help of the International Monetary Fund helped the economy grow 1.8% in 2006, the highest growth rate since 1999. Haiti suffers from higher inflation than similar low-income countries, a lack of investment (increasing however since the recent presidential seating), and a severe trade deficit.

The government relies on formal international economic assistance for fiscal sustainability. In 2006, Haiti held a successful donors conference in which the total aid pledged exceeded Haiti's request. Remittances are the primary source of foreign exchang , equaling nearly 20% of GDP. Haiti's economy was severely impacted by the 2010 Haiti earthquake which occurred on 12 January 2010.Before Haiti established its independence from French administration in 1804, Haiti ranked as the world's richest and most productive colony. In the formative years of independence, Haiti suffered from isolation on the international stage, as evidenced by the early lack of diplomatic recognition accorded to it by Europe and the United States; this had a negative impact on willingness of foreigners to invest in Haiti. One very significant economic obstacle in Haiti's early independence was its necessary payment of 150 million francs to France beginning in 1825; this did much to drain the country of its capital stock.

In 1838, France agreed to reduce the debt to 60 million francs to be paid over a period of 30 years. In 1883, Haiti made the final payment to France. Since then, and even in recent years, public spokesmen in Haiti as well as international academics and statesmen have denounced this event as the payment of an illegitimate debt, in several cases calling on the French government to repay it (the French government has never been willing to repay it, though there was a hoax following the 2010 Haiti Earthquake involving a fake website purporting to offer reparation payment on behalf of the French Government). Since the demise of the Duvalier dictatorship in 1986, international economists have urged Haiti to reform and modernize its economy.

Under President René Préval (President from 1996 to 2001 and from 2006 until 14 May 2011), the country's economic agenda included trade and tariff liberalization, measures to control government expenditure and increase tax revenues, civil-service downsizing, financial-sector reform, and the modernization of state-owned enterprises through their sale to private investors, the provision of private sector management contracts, or joint public-private investment. Structural adjustment agreements with the International Monetary Fund, World Bank, Inter-American Development Bank, and other international financial institutions aiming at creating necessary conditions for private sector growth, have proved only partly successful.